Good workmanship and deliveries brought name and fame to Finetex. The 21st part of a series describing the unknown triumphs and travails of doing international business
I followed the buses as they carried our staff to their quarters. It took almost an hour to reach their secured ladies camp, which was located just outside the Free Zone, and was approved by the authorities. There were only a restricted few who had access to the camp, and I was one of them.
There were couple of girls, including the first supervisor, called Malkanthi, who could converse in English; the other was arriving on the next flight couple of days later. One the procedures were all explained and formal introductions made in the camp, I returned back to inform Perera the position and began my work on preparation of documents, passports, etc to the Free Zone authorities the next day.
As was the practice, I left home little earlier than seven, so that when the bus arrived at the plant, I would be there. Piyasena and his team were already in the office and Bob Eustace had not only activated the power, but was present to reassure Perera that he was ready to extend all the help when needed.
Piyasena being a very methodical man again went through the process of interviewing each girl and making his own assessments of their knowledge and capabilities. Our plant was to be based on batch production basis and the very best operator for making a particular product was to be assigned that job only for obtaining the best finished product.
By the end of the day, we found that the first lot of 60 girls could not complete a production line; in the sense, for example, we had couple of girls who could make excellent cuffs, but we had none who could make top quality collars; likewise, other parts of the garments had to be all made ‘perfectly’ so that, when assembled, the final product would be a “perfect shirt, blouse, whatever”. This kind of mismatch was expected, Perera said, until the entire recruited staff are assembled and tested for their actual knowledge and capacity. This inadequacy was covered after arrival of all flights!
The next lot of 79 girls was due on the 17th, when we had scheduled our production. By this time, the first lot had got acclimatized to the camp and canteen and whole-heartedly welcomed the new group. The third and fourth lots were scheduled to arrive one day apart, on the 19th and 21st, by which time we could complete our full complement of the plant. Their arrivals and locations in the camp went on without a hitch.
The processing of documents for the entire batch continued without a moment’s rest; these had to be submitted immediately upon arrival; as the Free Zone officials had to complete their recording before passing the documents to the immigration authorities so that the local ID (also called the pataka) had to be issued to every single employee, which they had to keep in their possession all the time.
Our wage bill had started the moment the staff arrived in the country and everyone was busy doing his/her job to set the whole operation in motion.
But I had not finalized any immediate order for processing in the plant. I had the option of taking a contract job, which is what I had planned initially for a few months before accepting direct orders. The choice was to speak to my good friend Aziz at Singleton and/or Sheru at Palmon, both of whom had specialized in making a variety of shirts.
A word or two about contract jobs would be nice. The main contractor let us say Singleton, in this instance, may have received an order for 50,000 shirts from a single client in the US, for dispatch to various stores in New York, Atlanta, Baltimore, San Francisco and Florida. This would have been based on the fabric, style and design of the shirt approved by the client. Singleton would have sourced the raw materials like cotton sheeting (from India) and accessories (mostly from Hong Kong). Once the goods are in-house, they (Singleton) may start production in their own plant and give sub-contracts to others, like they did with us, for a job work. For the sake of easy understanding, Singleton confirmed the order on us, and sub-contracted us to make 12,000 shirts @ $15 a dozen. Our only responsibility was to supply our own threads (cotton, in this case) and make the shirts per approved design and deliver the goods, ironed and packed in their polybags, all ready for shipment. They gave us 15 days to deliver the above lot, considering the fact that we had just started, and we may have some hiccups.
We overcame our troubles, sometimes relocating the staff from one particular operation to another and delivered the goods in about 12 days, earning a total of $12,000 as our sub-contracting labour charges, minus the cost of threads. During the process of manufacture, Singleton had their inspectors testing for quality and workmanship and ensuring that we were consuming the fabric in line with their estimates. As the work was progressing midway, we began to get feelers from others if we could do their jobs, as well.
Piyasena and his team worked in tandem and we received good appreciation and orders from our neighbours. Without our capital investment, in terms of importing raw materials and accessories, we simply ensured the supplies of these locally and met their exacting demands and earned our keep.
All our staff members had good experience on Juki machines; some had good knowledge of Pegasus; many others were good only for laying and cutting departments, while others were in ironing, packing; most had experience of thread cutting (removing loose threads, etc), which meant standing for at least eight hours at a stretch!
Finetex was the first plant in the Free Zone which had large canteen facilities for staff to have their meals; it had adequate provision for a great number of rest rooms for men and women separately and a sick-bay, in case someone was under the weather, so that they could take rest before resuming work.
Juki’s main competitor was Singer, whose local representatives got in touch with our senior partner and was willing to give special terms. They wanted us to lead in the use of Singer machines; I think we decided to buy some 100 machines or so from them. Delivery was promised ex-stock (almost within 10 days) but what could we do without supporting personnel? We asked for delivery some six weeks later, because of the process of recruitment, obtaining of visas, and getting seats in overcrowded lights from Colombo.
Some six months had elapsed since Piyasena Perera had commenced production and he worked generally for more than 10 hours every day. I have never seen anyone as conscious as he was in running a plant in my life, so knowledgeable and hardworking.
Zubair was regular in his visits to the factory and we had regular meetings. We felt a change in the atmosphere; Piyasena’s visit to his family was overdue. We sent him off on his mission to get the additional staff to match the Singer machines we had ordered.
For next seven days I was acting as the production manager also, thanks to the unstinted cooperation that I received from Malkanthi, Chandra, Ruby and a couple of others. For me, too, generally it was a minimum of 10 to 12 hours a day in the plant, in addition to the driving time to cover some 50 km each way.
We began to accept orders from reputed importers who visited our plant; also the Free Zone would recommend a visit to our plant, as it was the newest and built with comprehensive facilities. There was not a single garment importer who had not visited our plant even though they may be regular buyers from others. Our workmanship and deliveries brought name and fame to our door-step.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts. From being the advisor to exporters, he took over the mantle of a trader, travelled far and wide, and switched over to setting up garment factories and then worked in the US. He can be contacted at [email protected].)
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Commander Ravindra Pathak (retd) and Col Suresh Patil (retd) who have been campaigning against excess defence land being taken by President Pratibha Patil are well known activists in Pune. Let’s see how far their tenacity takes them in this campaign which is connected with the highest chair in this country
Col Suresh Patil (retd) saw death at close quarters when six of his colleague officers and 67 men were killed in the J&K sector in the 1971 Indo-Pak War. Commander Ravindra Pathak (retd) too was challenging death, as he was given the task of clearing under-sea mines to make Chittagong Harbour operational, immediately after the same war.
Today, both say they were gifted with a second life and hence, decided since then to give it back to the society, once they hang their boots, somewhere in the early 1990s.
It’s a story of two soldiers and one mission – to fight against encroachment of defence land by the present Supreme Commander of the Armed Forces, who is none less than the President of India, and it’s Pratibha Patil, this time round.
Col Patil fired the first salvo in August 2011 when he got a whiff of President Patil “grabbing’’ a prime defence land in Khadki cantonment of Pune, admeasuring a whopping 2,42,000 sq ft as against her eligibility of getting only 4,498 sq ft of an existing government bungalow in any part of the country, as her retirement home.
Col Patil, who formed the `Justice for Jawans’ organisation for ‘serving’ and ‘retired’ soldiers and officers who suffer many difficulties in terms of accommodation and other issues, took up the President’s retirement home issue, rather intensely.
His initial war cry to halt this unjustified “capture’’ of land when the President’s soldiers and officers in the same city were being denied their rightful official accommodation due to lack of space, did not have much impact. It fell on deaf ears of the authorities as well as the media. In the meanwhile, Defence Estate officers of Pune were making hectic trips to and fro Pune-Delhi to make way for Pratibha Patil to legally get this vast tract of land, studded with two `living’ bungalows.
Col Patil appealed to other defence NGOs to join in the campaign. That’s how Comm Pathak came into the picture. Since 2008, he was also working towards the cause of pension related issues of retired soldiers on behalf of the Delhi headquartered Indian Ex-Servicemen Movement (IESM).
After the sixth pay commission, the IESM had taken up a campaign nationally to demand ‘one rank one pension’ as consecutive pay commissions recommended different criteria for soldiers and officers who may have completed the same years of service; belonged to the same group; and held the same rank; but drew different pensions depending on the year they retired.
Protests manifested in the form of 25,000 soldiers and officers returning their medals to the Pratibha Patil, since 2010. As per the protocol, the President of India in his/her role as Supreme Commander of the Armed Forces is required to personally accept the ‘returned’ medals as a traditional form of protest. Ms Patil to date has not given an appointment and hence, the medals are lying in the Delhi office of IESM. Hence, the ire against Pratibha Patil was already there in the eyes of IESM members.
In early 2011, Comm Pathak decided to join Col Patil and ever since the campaign has picked up momentum. They collected incriminating evidence against her proposed retirement home through RTI. However, they got a luke warm response from the media until this week’s story in Moneylife made national waves and went viral on the social network. Suddenly the controversy is raging through all corners of the country.
Col Suresh Patil (retd) is otherwise known as an environmentalist and has been involved in greening some parts of the cantonment. The two kilometre Bogra Walking Plaza that has been turned into a beautiful landscaped garden was once a stinking nallah. Similarly, he has greened another two kilometre stretch of a nallah bank in the Pune Municipal Corporation area, under his Green Thumb NGO. More details can be found at www.greenthumbindia.org. Commander Pathak is active on this blog: http://iesmorg.blogspot.in/
(Vinita Deshmukh is a consulting editor of Moneylife. She is also an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte. She can be reached at [email protected])
The main reason why the Chinese slowdown does not scare pundits more is that they expect China to repeat its past actions by loosening its monetary policy and stimulating its economy as it did in 2009
China is slowing. Its (gross domestic product) GDP growth rate has fallen to 8.1%. Not to worry. Forecasters everywhere are more than confident that the Chinese can stimulate the economy if things start to get bad. This might be true if China was a normal economy, but its strengths can quickly turn into weaknesses. The reality is that they have the wolf by the ears and there might be no way out.
In its latest forecast the World Bank has cut its forecast for China from 8.4% to 8.2%. While this growth rate seems enviable, it is a 13-year low. The Bank also forecasts that the Chinese economy, after a soft landing, will bounce back by the third quarter of 2012. The recovery’s shape would be somewhere between a vigorous ‘V’ and a flat ‘L’. The World Bank also forecast in June 2008 that the US would grow at 1.1%, Europe would grow at 1.9% and China would continue its growth of 9.4%. It also predicted in 2008 that a slowdown in the US would have little effect on China. It was wrong, very, very wrong.
The World Bank’s forecast has lots of support. A recent poll of 15 economists produced a median forecast of 8.3% while the Asian Development Bank (ADB) came in a little higher at 8.5%. Like the World Bank, the ADB’s forecast has been lowered from their report in December.
But it is not just the economic boffins who are forecasting slower Chinese growth. There is evidence from the real world as well. The most telling has to do with commodities. Over the past two years commodities seemed tied to equities. This has changed recently. World stock indices rose more than 11% in the first quarter while the Reuters-Jefferies CRB commodity index stalled, up only 0.2 %. This was reflected in Morgan Stanley’s index of commodity producers whose shares lagged behind other sectors and gained only 4%. The sluggish growth was no doubt due to falling demand from China.
Real estate construction accounts for 13% of China’s economic growth, but the sector is also slowing. Sales transactions in Beijing, Shanghai and Shenzhen are about 30% below levels last December. Investment in property construction growth was up 12% of the previous year in December, but that was half the growth in November. Developers have up to two years’ worth of supply on their books and there are an estimated 10 million to 65 million unoccupied apartments in China.
Car sales are also slowing. In 2010 car sales exploded, growing at 32%. They are still rising, but only at 4.5%. Dealers are now discounting to attract buyers. There is a concern that the annual forecast for a 10% rise in sales will not materialize.
The slowdown in China is cause for concern far from its shores. One estimate puts Chinese contribution to global economic growth at two-fifths, twice the contribution of the former locomotive, the US. China has also replaced the US as the dominant trading partner of an ever increasing number of countries. It makes up over 20% of exports of Taiwan, Australia, Korea and Japan. The impact of China’s slowdown is not evenly spread. It contributes over 1% to the GDP of Russia, Korea, Indonesia and Brazil. Germany, as well, would be quick to feel a chill, since China contributes .8% to its GDP growth. In contrast the US economy would hardly be affected. China takes only 7.6% of its exports and it contributes only 0.1% to its growth.
The main reason why the Chinese slowdown does not scare pundits more is that they expect China to repeat its past actions by loosening its monetary policy and stimulating its economy as it did in 2009. Certainly it is trying. Bank lending in March rose to 1.01 trillion renminbi. This is high by even the more recent standards of the last two years and is two and a half times the amount of lending of last September and October. It is equal to a third of the entire amount of money lent in 2008 alone.
Not surprisingly inflation, which was considered tamed, has risen again from February and food prices are rising again despite record foreign purchases. It is not only inflation that is an issue. Most of the money lent by the state banking system goes to local governments. The most recent estimate is that about 10% will go bad by 2013.
So the Chinese have a problem. Their economy is slowing. Western economists feel that they have plenty of room for further stimulation, but that stimulation only results in higher inflation and bad loans. As influential economist Tsinghua University Professor Yuan Gangming puts it “Monetary policy is already quite loose and the central bank won’t loosen more unless it wants to die”. Apparently they do.
(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and has spoken four languages. Mr Gamble can be contacted at [email protected] or [email protected]).